Fast Food Management

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Case Presentation: Taco Bell Pat Lauscher and Jesse Paprocki

BUS 754: Information Systems Mgmt Spring 2003

HISTORY (EVENTS)

Company Focus:

John Martin joined Taco Bell in 1983 as president and CEO, having previous executive level experience with other fast food chains. He discovered that the company didn’t know what business it was in, so he quickly focused Taco Bell on the fast food industry.

Process Improvements:

1983-1988: Strong growth in the 60s and 70s came to a halt in the early 1980s as the fast food industry began showing signs of maturity. To deal with the potential threat of a maturing business, Taco Bell began a series of process improvement initiatives that really changed the way it did business. These improvements included increased restaurant capacity by modernizing its restaurants to include drive through windows, increased seating capacity, electronic point of sales systems (to replace plastic order boards), and reconfigured food production areas. Taco Bell also added some new menu items during this time.

1988-1991: Continuing to feel the effects of an industry margin squeeze, Martin commissioned two studies that tuned the company in to what the customers really valued, FACT (Fast, Accurate, Clean, and Temperature). In response, the organization stopped viewing quality and price as incompatible tradeoffs.

The K-minus program transformed the kitchen into a heating and assembly unit and centralized cooking and chopping, to make more room available for drive through and dine-in customers. The Speed of Service (SOS) initiative further increased restaurant capacity by allowing for the advanced preparation of Taco Bell’s most popular menu items. The Role of Management:

Role changes: Martin changed the role of the restaurant manager to that of a general manager, giving them more decision-making authority and more accountability for restaurant performance. Additionally, the role of the district manager was changed to that of a marketing manager. The increased span of control for this position, virtually forced marketing managers to manage by exception and change their approach from policeman to that of a coach.

Compensation: Both types of managers received changes in their compensation that provided for greater earnings potential through performance incentives. Many restaurant managers and district managers did not succeed in their new roles. Fortunately the new compensation plans were designed to attract and retain highly skilled individuals.

Safety nets: As layers of management were removed, three primary safety nets were installed to ensure control and adherence to company policies and values:

The installation of a toll free customer comment line that was answered by an independent vendor Mystery shoppers visited restaurants and provided feedback that was factored into managers’ bonus calculations. Random marketing surveys were taken to provide customer feedback that was also used in calculating manager bonuses. Information systems:

TACO: An information and communication system was needed to support Taco Bell managers in their new roles. As a result, Taco Bell implemented the TACO system that linked each POS system with the marketing managers and corporate headquarters. TACO provided all levels of management with better information and improved communications within the company. This system reduced paperwork, provided reports on costs, provided sales estimates, and gave them email.

TACO II: In the early 90s, a more user-friendly computer system was introduced to support local crew members by allowing them to share information with each other to improve job performance.

Learning Organization:

Shared resources: In the early 1990s Martin again reformulated the company’s strategy, setting out to create and dominate the...
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